Days Sales Outstanding (DSO)
Average time to collect payment from customers.
Formula
DSO = (Receivables ÷ Revenue) × 365
Real World
In 2023, Carillion's collapse was partly attributed to inflated receivables — its DSO had crept up to over 70 days, masking the fact that customers were slow to pay and cash was drying up.
Exam Focus
When asked to 'analyse' DSO, always link a rising figure to cash-flow consequences, not just the definition.
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